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Unilever in 1986 ANNUAL REPORT AND SALIENT FIGURES ESC,LI4H \-tKSIOS IS GPILL)F.KS N.V. ANNUAL REPORT 1986 AND SALIENT FIGURES

Contents Paw Unilever 2 Financial highlights 3 The Board 4 Foreword 5 Directors’ report - general - review by regions 1: - review by operations 14 - other subiects 26 Salient figures 31 Capital and listing 39 Dates for dividend and interest payments 39 Financial publications 40

Introduction The first part of this booklet comprises an English translation of the Unilever N.V. Directors’ Report for 1986. The second part, entitled Salient Figures’, contains extracts from the combined consolidated annual accounts 1986 of Unilever N.V. and Unilever PLC, comparative figures for earlier years, and further information of interest to shareholders. The currency figures given in this booklet are expressed in guilders and are for N.V. and PLC combined, except where stated otherwise.

The complete Unilever N.V. annual accounts for 1986, together with the auditors’ report thereon and some additional information, are contained in a separate publication in Dutch, which is also available in an English translation entitled ‘Unilever in 1986, Annual Accounts’. That booklet comprises the annual accounts expressed in guilders of N.V. and the N.V. Group, the PLC Group, and the combined N.V. and PLC Groups.

The original Dutch versions of the two booklets mentioned above, together where necessary with the Chesebrough-Pond’s Inc. Consolidated Financial Statements for 1986, comprise the complete annual report and accounts and further statutory information, drawn up in accordance with Dutch legislation.

There are also English versions of both booklets issued by Unilever PLC with currency figures in pounds sterling. In addition an English version of this booklet is available, with currency figures translated into US dollars.

For further information about the various booklets and where these can be obtained, see page 40. The Unilever group of companies is one of the world’s largest businesses employing some 300 000 people and providing a wide range of products and services in some 75 countries.

There are two parent companies: Unilever N.V., Rotterdam, and Unilever PLC, London. These companies operate as nearly as is practicable as a single entity, have identical Boards of Directors and are linked by a series of agreements of which the principal is the Equalisation Agreement. Among other things, this Agreement equalises the dividends payable on the ordinary capitals of N.V. and PLC according to a formula set out in the Agreement.

As a consequence, the combined affairs of N.V. and PLC are more important to shareholders than those of the two separate parent companies and this review accordingly deals with the operations and results of Unilever as a whole.

The larger part of Unilever’s business is in branded and packaged consumer goods such as washing powders, margarines, personal products and a wide range of frozen and other foods and drinks. Unilever’s other activities include speciality chemicals, agribusiness operations, including plantations and animal feeds, and medical products. In addition, there are merchandising and service operations conducted in tropical Africa and the Arabian Gulf. Results FI. million

Turnover 66771 55363

Operating profit 3797 3632 Profit before taxation 3814 3694

Profit after taxation 2223 2265 Profit attributable to shareholders 2064 2 144 Ordinary dividends (718) (751) Profit of the year retained 1330 1377

Earnings per share a) Guilders per FI. 20 of capital 36.79 38.22 Pence per 25p of capital 137.96 177.55

Ordinary dividends N.V.: Guilders per FI. 20 of capital 14.82 15.33 PLC: Pence per 25p of capital 38.62 51.16

O/O O/O Operating margin “) 5.7 6.6

Return on capital employed “1 10.5 11.3

Return on shareholders’ equity “) 15.5 17.8 a) For method of calculation see notes on page 37 THE BOARD

M. R. Angus

Directors of N.V. and PLC Advisory Directors of N.V. and PLC F. A. Maljers 6. W. Biesheuvel Chairman N. V. T. Browaldh Vice-Chairman PLC Fletcher L. Byrom Sir Robert Haslam M. R. Angus A. Herrhausen Chairman PLC The Rt. Hon. the Lord Hunt of Tanworth Vice-Chairman N. V. Francois-Xavier Ortoli D. Spethmann Sir Geoffrey Allen E. P. Wellenstein R. W. Archer M. Dowdall Secretaries of N.V. and PLC P. V. M. Egan D. C. Buijs H. Eggerstedt S. G. Williams J. P. Erbe (Vice-Chairman N. V.) W. K. Grubman Auditors of N.V. M. G. Heron Price Waterhouse Nederland J. A. Houtzager Coopers & Lybrand Nederland H. Meij M. S. Perry Auditors of PLC G. K. G. Stevens Coopers & Lybrand M. Tabaksblat Price Waterhouse T. Thomas K. H. Veldhuis E. J. Verloop

This list contains the names of all the Directors In office both at 31st December, 1986, and at the date of slgnmg the Report and Accounts 31st March, 1987

Sir Kenneth Durham retired at the Annual General Meetings In 1986 FOREWORD

1986 has been a year of very good progress. We are particularly encouraged by the general improvement in performance in almost all sectors of the business, which is clearly reflected in a growth of 21% in earnings per share at constant exchange rates.

Once again the impact of our results will vary with the currency in which the accounts are stated. In sterling and US dollars our earnings rose by an even better 29% and 31% respectively. On the other hand, in guilders the growth was a seemingly modest 40/o, because of the major strengthening of this currency.

There has been considerable progress in the year towards achieving our strategic objectives. Our core activities have been further strengthened by acquisitions and by rigorous attention to efficiency and innovation. Most of the companies with no place in our future strategy have now been sold. Restructuring has been costly, but as a result the profitability of the business is much improved and more securely based.

Our planned investment in strengthening our position in the United States has continued and has brought about significant increases in market share. We are now materially stronger in one of the world’s most important and competitive markets.

Our sales value in 1986 is much affected by divestments. These obscure the fact that our underlying business has grown appreciably during the year and that volume has increased by a noteworthy 5%.

The highlight of 1986 was the acquisition of Chesebrough-Pond’s at the end of the year. We have long declared that an increased presence in the United States by means of a major acquisition was a fundamental strategic aim. With Chesebrough-Pond’s we achieve this and at the same time strengthen our profitable personal products business worldwide. A number of other acquisitions were also completed, all in our core product areas. Of these the purchase of Naarden International was also of global importance and will double the size of our international fragrances and flavours business.

The Company is now well placed for further profitable growth and is better equipped to face the competitive challenge. We shall continue to concentrate our resources on those businesses in which we have the necessary skills to compete effectively.

However, there are external factors which could impede our progress. The long overdue measures recently taken by the European Community to reduce excess milk production and eventually butter stocks are welcome. To our dismay however came the subsequent proposal for a new levy on oils and fats. This would create yet another arbitrary distortion in one of our principal markets, as well as levying an unwarranted impost on the consumer. We strongly oppose this measure.

The tempo of activity seen in the business in recent years has made special demands on our personnel - particularly our management. They have splendidly risen to the challenge and we would like to pay tribute to all their hard work and effort.

M. R. Angus F. A. Maljers Chairman Unilever PLC Chairman Unilever N.V. Vice-Chairman Unilever N.V. Vice-Chairman Unilever PLC costs are included in the total exceptional Results items charge of FL 221 million (1985: FI. 137 million). In the United States we continued to gain market share but the heavy investment in promoting both established The reported financial results of 1986 have and new products held back the increase been much influenced by the differing in dollar operating profit to 7%. In the rest strengths of our two reporting currencies, of the world we had an excellent year with the pound sterling and the guilder. Whilst operating profit at constant exchange ‘A fundamentally most European currencies appreciated rates up by 20%. strong result’ substantially against sterling, the guilder remained one of the world’s strongest Our 1984 results contained an currencies. extraordinary provision of FI. 356 million for losses consequent on the decision to A fundamentally strong 1986 result withdraw from certain activities. Most of throughout the world therefore became an the businesses concerned have now been excellent one when expressed in sterling, sold and the provision made in 1984 is with operating profit and profit attributable proving to be adequate. respectively 18% and 29% better than 1985. The same result expressed in guilders showed a 4% decline in operating profit and only a modest 4% increase in profit attributable. When expressed in US dollars the trend is similar to sterling with increases of 2 1% and 3 1%.

In Europe improving results continued to flow from our policy of concentrating on core activities. Operating profit at constant exchange rates improved by 6% despite substantial restructuring costs. The major

Earnings and dividends per share Guilders per FL 20 of capital Pence per 25p of capital

1981 1982 1983 1984 1985 1986 DIRECTORS’ REPORT ~

The acquisition of Chesebrough-Pond’s has brought with it brand names which are famous in the United States and throughout the world.

States and thus supports a cardinal part of Acquisitions our strategy. It will provide the means to build a major stake in the American personal products market in combination with our existing business. It will also give On 30th December, 1986 we made a major our operations around the world a strategic acquisition in the United States presence in the skin care market where when the shareholders of we have hitherto been under-represented. Chesebrough-Pond’s Inc. accepted the tender offer for that company which we We have purchased famous international had made with the recommendation of its brands such as Pond’s creams, board. The amalgamation of Intensive Care, Q-tips and the Cutex range Chesebrough-Pond’s with Unilever will of cosmetics. The portfolio also includes in strengthen our business base in the United the United States the range of fragrances and cosmetics, and position in the world market for fragrances the Raglj brand of spaghetti sauces, which Geographically the businesses fit well is the market leader and highly together and their combined research, complementary with our foods interests. development and creative strengths should enable them to achieve a faster We plan to integrate the management and growth than would have been possible as ‘We have purchased administration of these businesses with independent companies. famous international our own around the world during the first brands’ half of 1987 in order to benefit as quickly We continued to seek acquisitions which as possible from the combination of our add value by enabling extension into strengths. We believe that there are good countries where we are not yet opportunities to extend the distribution of represented in a particular market, or by the brands of both companies. adding products to our core businesses or in areas related to them. For example in There are also some businesses which do 1986 we completed the purchase of the not fit our future plans and we are actively J.H. Filbert margarine business in the taking steps to sell them. United States, and of the majority holdings in the Anderson Clayton companies in Chesebrough-Pond’s and its subsidiaries Brazil and Mexico which principally sell have not been included in the consolidated margarine and other foods. We also made group accounts for 1986. The acquisition an important addition to our food interests took place on the penultimate day of the in Spain by the acquisition of the Revilla year, and we took the view that their meat company. inclusion at appropriate values would involve expense and delay out of all proportion to the benefit to shareholders. Therefore our investment is included in the Group accounts at cost.

Naarden International was also acquired in 1986. This company is based in the Netherlands and operates in 24 countries as a leading international supplier of flavours and fragrances. The combination of this company with PPF International will create a total business which ranks as a world leader. Naarden’s expertise in flavours fully complements PPF’s strong

Naarden International brings to Unilever additional expertise in fragrances and flavours. 1981 1983 1984 1985 1986 1982 Value added

these additional borrowings and where Finance appropriate Chesebrough-Pond’s existing debt during 1987. The cash for these repayments will come from drawing further on Unilever’s existing cash resources, the During 1986 we continued to strengthen proceeds of disposal of those parts of the contrlbuttons the balance sheet and to increase our company which we intend to sell and ability to finance a major strategic on-going cash flow. In this way we expect investment. Net liquid funds, including the rapidly to restore the strength of the effect of exchange gains, increased by balance sheet. The major credit agencies FI. 1 347 million as payment for the shares reviewed our financing plans following the of Chesebrough-Pond’s was not made acquisition and subsequently confirmed a governments until January 1987. Cash and current continued rating of our long-term debt of In taxation investments were managed to ensure their ‘AAA’, their highest rating. ready availability if needed for strategic To providers use whilst achieving optimum returns. In We spent FI. 1 246 million on acquisitions of capital addition we increased our borrowing other than Chesebrough-Pond’s, some of capability by negotiating with a group of which represent important developments Loans (Interest) major banks stand-by facilities of FI. 5.8 for the business groups concerned. We billion at very competitive rates. We sold another 24 businesses which did not continued to manage our borrowings in fit our core business strategy; these Shareholders (dividends) order to minimise financing costs; a realised proceeds of FI. 641 million. number of opportunities were taken to Outside arrange borrowings through long-term shareholders issues at attractive rates, making use and preference where appropriate of currency and dividends interest rate swaps. Reinvested in business The consideration for the purchase of the Depreclatlon shares of Chesebrough-Pond’s was US$ 3.1 billion. The immediate financing came from existing cash resources and from additional short-term borrowing, mainly the issue of US commercial paper. This was Profit retained the cause of the substantial increase at the year end in borrowings due within one year. We intend to repay the majority of DIRECTOh’ REPORT REVIEW BY REGIONS

Turnover by geographical areas 1986 (FL million)

Europe 33 823

North America 9 726

Rest of the World 11 814

Total 55 363

‘We have actively sought growth’ Operating profit by geographical areas 1986 (FL mullion) Europe 2 047

businesses which no longer fitted our Europe strategy have been sold. At the same time we have actively sought growth both from existing core businesses and by acquisition. The purchase of companies A combination of stronger currencies and such as Naarden International in the FI. million 1985 1986 significant falls in raw material prices Netherlands and Revilla in Spain will make Turnover 42 38 1 33 823 contributed to another marked decline in an important contribution to the future the rate of inflation throughout Europe. In development of our European business. Operating two of our major markets, Germany and profit 2083 2047 the Netherlands, the consumer prices In 1985 we noted that the pursuit of this index did not change. Economic growth strategy had improved our profitability; in was much the same as in 1985, but 1986 the improvement has continued. The consumer spending increased sharply, cost of our principal raw materials such as particularly in Germany and in the United tea, oils and fats fell as did the cost of Kingdom. energy. Turnover has declined because of the consequent lower selling prices and In the past few years our purpose the effect of disposals, but we have has been to concentrate on core activities achieved growth in our core businesses. and to ensure that our operations are Most countries made significant gains in efficient and that our products are profit in their own currencies, except the competitive. Considerable sums have been United Kingdom where provision has been invested in restructuring and a number of made for further major restructuring in the IRECTORS’ REPORT

The liquid detergent Wsk has recently been launched by m the United Kingdom. World raw material agreement to sell our international market European oilseeds and would create yet price developments research organisation. another burden on the consumer. Such a Indices are based on yearly measure should be strongly opposed. averagepricesexpressedinUS The agricultural problems of the European dollars 1981 : 100 Community became more acute; butter Edible fats and oils stocks reached record levels and despite 140 quotas the production of milk and butter increased yet again. The original quotas were clearly set at levels far above demand, and the recent decision by the Council of Ministers to lower the quotas further with the intention of reducing 80 production by about 10% by 1988/89 is to be welcomed. This is a step towards the 60 \ solution of a major problem facing the Community, but it is open to doubt whether 40 we have seen an end to over-production 81 82 83 84 85 86 and its wasteful consequences.

Tea However, the even more recent proposal 180 to impose a levy on all vegetable and marine oils and fats intended for human 160 consumption would, if enacted, create yet another absurd distortion of the market. It 140 would be a purely arbitrary means of raising revenue to finance the uneconomic 120 and ever increasing production of

100 n 80 81 82 83 84 85 86

Lipton again achieved record results and North America continued to grow steadily despite strong competitive attacks in its established markets. Market share in tea was strengthened and considerable progress Competition for market share remained a was made in the new areas of side dishes FL million 1985 1986 major feature in the United States and we and fruit snacks. The National Starch continued to invest heavily in promoting businesses made satisfactory progress in Turnover 11 553 9 726 our established brands as well as new a relatively unfavourable economic Operating products. Against this background it is environment. profit 432 369 pleasing to report that our companies again achieved a substantial growth in The overall result in Canada was again volume and that our market shares modest, but carried the cost of a major increased in almost all categories. Despite restructuring programme. Considerable the continuing high level of market progress has been made in positioning the investment there was an improvement in business to secure improved results in the dollar operating profit. future.

In the United States Lever Brothers’ ‘Our market shares detergents volume grew by 18% and there increased in almost was again an increase in market share as all categories’ the geographic distribution of new products was extended. The margarine business continued to grow and we have achieved clear market leadership. Some progress was made in resolving the problems of the personal products business, and our presence in this market has been considerably enhanced by the acquisition of Chesebrough-Pond’s at the end of the year. necessary raw materials was severely The Rest of the World restricted by shortages of foreign exchange. Because of this our sales and production efficiencies were adversely affected, but a prompt reaction by We have continued to exceed prevailing management to the new situation ensured rates of economic growth and our a satisfactory outcome to the year. companies have again achieved a FI. million 1985 1986 substantial increase in both sales volume There was a notable increase in market and in profit when stated in local activity in the Far East and the majority of Turnover 12837 11814 currencies. Our growth has been boosted our companies there had a good year. Operating by the introduction of new products, by Most of the economies in the area are well profit 1282 1216 acquisition and by a determined attention managed and we continue to believe that to cost competitiveness. there are excellent prospects for profitable growth. Accordingly we have In Latin America trading conditions stepped up the rate of investment in our generally improved and inflation was under companies. Our business in Japan moved better control; our results were ahead significantly and we are now gaining consequently much improved. With the market share in several key areas. purchase of majority holdings in the Anderson Clayton companies in Brazil and Mexico we have considerably strengthened our edible oils and fats ‘Our companies have businesses in those countries, and again achieved a obtained a base from which to develop a substantial increase in foods operation. We now have a both sales volume and substantial presence in our core product areas in both these important countries. profit’

In Africa and the Middle East economic growth was constrained by low world prices of mineral oil and other commodities, and our ability to import

The Anderson Clayton brands have considerably strengthened our foods busmess in Brml where F/ore//a IS a popular rnargarme. Turnover by operations 1986 (FL million)

Margarine, edible fats and oils, Other operatrons dairy’products 12 019 (Paperboard and packagmg, fish and restaurants, and Frozen foods and medical products) 3 252 ice cream 6 743 Agribusiness 2 042

UAC International 2 775 Other food and drinks 8 774 Speciality chemicals 4 192

Personal products 3 389

Detergents 12 177

Total 55 363

fat butter under the Du darfst name in Margarine, edible fats and oils, Germany. We also introduced a low fat dairy products variety of Becelin Belgium and Germany. In the United Kingdom we extended Delight! nationally following a successful The fall in raw material costs and the test in 1985. FL million 1985 1986 consequent lower selling prices for our products had a favourable effect on our The liquid oil market in Europe grew Turnover 15 828 12019 volume and profitability and, even though slightly and we improved our overall share. substantial restructuring costs were again We entered the Spanish market with Flora Operating incurred in Europe, operating profit at oil. profit 759 825 constant exchange rates improved by 18% over 1985. In 1986 less subsidised butter Our companies which sell fats and other was made available to consumers in the products to bakeries, catering outlets and European Community than in previous food industries had another good year and years. we gained market share. The provision of ingredients for a wide range of bakery The general decline in fat consumption in products is an increasingly important Europe continued. Butter was the most business for us and we have been active in affected and lost ground to the increasing product innovation and in extending our number of melange products (mixtures of range to new markets. Sales of portion butter and non-dairy fats) on the market. packs of our retail brands to the catering Our health brands of margarine such as trade have also made good progress, Flora in the United Kingdom and Becelin especially in the United States. Belgium, Germany and the Netherlands performed particularly well. In the United States our margarine business has made great strides and The growth of low calorie products achieved market leadership. continued. Several new lines were added to the Du darfst range in Germany and similar ranges were launched in Belgium and the Netherlands. We were active in the important low fat sector with the launches of St. Florigny melange in France and a low DIRECTORS’ REPORT REVIEW BY OPERATIONS

Operating profit by operations 1986 (FI. mrllion)

Margarine, edible fats and oils, Other operations dairy products 825 (Paperboard and packaging, fish and restaurants, and Frozen foods and ice cream 401

/QUACternational 106

Other food and Speciality chemicals 441

Personal products 201

Total 3 632

The J. H. Filbert company was integrated In the rest of the world there was into the Lever Foods/Shedd’s operation significant growth in volume to which the and we now have a very substantial and newly acquired operations in Brazil and profitable margarine business. In Canada Mexico made an important contribution. 1986 was a year of reorganisation and the Profits also improved satisfactorily despite benefits are beginning to appear stringent price control in some countries.

Becelmargarme contmues to increase m popularity m Germany and other European countries DIRECTORS’ REPORT REVIEW BY OPERATIONS

Frozen foods and ice cream

1986 was a very good year for ice cream. FL million 1985 1986 ___i_- The summer was fine in much of Europe and there was some growth in the total Turnover 6791 6743 market. With exciting products and strong Operating innovation programmes, most of our profit 399 401 companies improved their market positions and in Germany we did particularly well. We have been successful in developing strong international brands both for consumption outside the home and for use at the table. Much of our success in both new and existing products stems from the use of sophisticated production technology.

Outside Europe there was a modest increase in profit. The extension of sales tax to ice cream checked the growth of our company in Australia.

Growth in frozen foods was lower than in previous years and although there is evidence of some decline in demand for frozen vegetables there remains a strong facilities proceeded according to plan with demand for quality convenience products. the closure of the Acton and Great We have made successful and innovative Yarmouth factories and the transfer of entries into specific segments of the their production to other sites. market such as plated meals (a complete meal in an attractive ready to serve presentation), light menus (aimed at consumers who prefer low calorie eating), potato products and products which can be prepared in the microwave oven. We maintained our leading position in most markets, and our companies in Austria, Belgium, Italy and the Netherlands again produced good results.

In the United Kingdom agreement was reached to transfer the Birds Eye Wall’s distribution operation to third parties. The major reorganisation of production DIRECTORS’ REPORT REVIEW BY OPERATIONS

The development of the kiosk has contributed to the increase of ice cream sales and market share in Spam

We maintained leadership of the instant Other food and drinks soup market and products with improved formulations were successfully relaunched in a number of countries. Particularly good results were achieved in Canada and the Our European tea businesses had an Netherlands. Little progress was made in Ft. million 1985 1986 outstandingly successful year. Marketing the static regular soups market in Europe; -~- activity in support of the and however, in the United States Lipton held Turnover 11311 8774 PG Tips brands was stepped up and with its leading position in the face of ~.-.-..- the benefit of favourable tea prices there determined competition. In France a new Operating profit 800 747 was excellent progress in both volume and range of liquid bouillons was launched .-.~ ..-- .~..~ .-.. profit. In the United States Lipton under the Royce name, and in the United introduced new flavoured teas and fruit tea Kingdom the long established OXO cubes varieties and further strengthened their improved upon their already strong market market position. Our tea businesses position. overseas have continued to grow and new ventures have been started in Turkey and The European dressings business, which Korea. covers a wide variety of sauces, salad DIRECTORS’ REPORT REVIEW BY OPERATIONS

dressings and mayonnaise, continued to In the United States Lipton built upon the grow profitably. Calve mayonnaise and success of its rice and pasta based side sauces were particularly successful in dishes with the addition of new varieties. Belgium, Italy and the Netherlands. Side dishes have also been adopted in Canada with considerable success, and special rice dishes have been well received in the United Kingdom. The nutritional snack market in the United

A dellvery of new stocks of L/I ice tea to a kiosk m Cape Sou near Athens n DIRECTORS’ REPORT m REVIEW BY OPERATIONS

Brooke Bond IS developing clonal tea in Kenya in order to mcrease yields on its tea estates

States has developed into an important food sector in which Lipton has gained Detergents brand leadership with its Fun Fruits range. These fruit snacks were also successfully introduced into Canada. We succeeded in further increasing our A major restructuring of our United share of the world market and also FL million 1985 1986 Kingdom meat companies was announced achieved a substantial improvement in ~~~~~~___..~~.~.~~ ~~~ and as part of this programme profitability. Turnover 12 810 12 177 and Wall’s were merged. Particular attention is being paid to improving In Europe there was no respite in the fight Operating operational efficiency and developing for share of the consumer market, which profit 504 614 products to satisfy changes in consumer grew only slightly in volume terms. Our preference. A range of low fat sausages sales increased in line with the market; we under the Light & Lean label was held our position in fabric powders and introduced successfully and several other made good progress with fabric softeners meat products were relaunched. and dishwashing products, but lost some Elsewhere in Europe the meat companies ground with hygienic cleaners. In Austria, had a good year and sales of p&+s, Germany and Switzerland we introduced spreads and meat snack products phosphate-free washing powders. In the continued to grow. At the end of the year United Kingdom a liquid detergent for the we acquired the Revilla meat business machine washing of clothes was launched which has an important share of the under the Wisk name. branded meat products market in Spain. Operating efficiencies were further improved and margins were strengthened in almost all countries; our German business produced a much better result than in recent years. also increased our presence in industrial markets in many countries outside Europe.

In the United States we continued our programme of strong support for new and existing products, with the main emphasis on fabric washing. Sales rose substantially and our market share again improved. laundry powder was further extended into new regions, and Surf liquid was introduced. Snuggle fabric softener sheets were extended nationally and we continued successfully to defend Wisk volume against fierce competitive attack.

Elsewhere our businesses made significant gains both in volume and profit. In Japan a fabric conditioner was launched nationally. A detergent paste was introduced into a major region of Indonesia, and in Brazil we successfully introduced an improved household soap; sales of our detergent bars made significant gains in many countries of South East Asia and in India.

fabric condltloner was launched In Japan durmg 1986

Our European industrial detergents business continued to concentrate on sectors which offer high added value and by means of selective minor acquisitions we entered new areas of the market. We

In order to improve manufacturing Personal products effectiveness, plans have been announced to close one of the two Italian factories and to relocate the French factory. The main distribution warehouse in the United In Europe the personal products market Kingdom has been sold and the grew by about 40/o, whereas our business distribution operation taken over by third FL million 1985 1986 has grown at a faster rate and gained in parties. Turnover 3432 3389 market share. We have done particularly well with deodorants and , and The result in the United States was again a Operating have held our ground in the toothpaste disappointment. However, new marketing profit 195 201 market where the introduction of initiatives such as the launch of Trust ~_.- .~ anti-tartar brands was the signal for deodorant and Axis deo-cologne have intense market activity. started well. The combination of our existing business with the newly acquired We have continued to raise efficiencies Chesebrough-Pond’s will result in a strong and this, together with good progress position in the huge United States market towards buying on a European scale and for personal products. favourable movements in raw material prices, has provided the opportunity to Overseas markets were particularly support our brands strongly and thus buoyant and we saw significant growth in accelerate the growth of both sales and many countries in all our product groups. profit. In Japan, has proved to be a great success following its launch in 1985. In France Signal Plus is a popular toothpaste with children

melts in North America were strong and sales of adhesives to the electronics industry recovered. The resin business benefited from lower basic chemical prices and from the start-up of a new pressure polymer plant in the Netherlands. Important new speciality starch capacity in the United States was brought on stream at Kansas City, and additional wet milling capacity was acquired in Hamburg to supply growing European speciality starch demand. Other strategic acquisitions to strengthen the worldwide adhesives business were made in South East Asia Speciality chemicals and in Italy. PPF International continued to develop its worldwide flavours and fragrances Sales and operating profit improved at business; there was some weakness in constant exchange rates as we continued sales to overseas countries but this was our policy of expanding the speciality compensated by a stronger performance FL million 1985 1986 segments of our business through internal in Europe, the United States and Canada. Turnover 4785 4192 investment in plants and research, and by -~- - selective acquisition throughout the world. The acquisition of Naarden International Operating was an event of considerable strategic profit 508 441 National Starch’s adhesive business importance. Naarden is one of the world’s performed well worldwide; sales of hot leading flavours and fragrances companies with a turnover of similar size to PPF International. Naarden and PPF will jointly provide a most comprehensive product range throughout the world backed by excellent research and creative capabilities.

In oleochemicals Unichema made excellent progress in the industrial chemicals sector, but profits in the glycerine market were significantly eroded by falling prices. During the year a major investment in upgrading and extending the nickel catalyst manufacturing plant at Emmerich in Germany was completed

Crosfield has now secured an important share of the European market with its new petroleum cracking catalysts. The metasilicate plant at Eijsden in the Netherlands had a very successful first full year and made a good contribution to profit. In the United Kingdom the silicate and speciality silica businesses showed some improvement in both sales and profits.

economic conditions as the countries in UAC International which they operate were affected by falling income from mineral oil or the weakness of agricultural and other commodity prices. The restructuring of the group, carried out after a strategic review in 1984, has been FL million 1985 1986 The figures in the margin relate only to instrumental in enabling a profit to be made those companies in which UAC despite these adverse conditions. Further Turnover 3528 2775 International has a majority shareholding progress in implementing the new strategy and which are consolidated in the was achieved during the year. In the United Operating accounts. In addition there are substantial Kingdom and France several companies profit 106 106 holdings in associated companies, mostly considered peripheral to the mainstream in Nigeria. The principal activity of the UAC activities were sold. group of companies is the sale in tropical Africa and the Middle East of specialised In Nigeria it was a year of adapting to a consumer and industrial products and changing and uncertain economic climate. capital goods. These are sourced both Our consumer businesses suffered from from world markets and to an increasing reduced demand and shortage of stocks; extent from local investments in but the technical business concentrated manufacturing and assembly. successfully on servicing and rehabilitating existing equipment. Substantial Most of UAC’s businesses faced difficult investments were also made in agricultural DIRECTORS’ REPORT REVIEW BY OPERATIONS projects to provide raw materials for group Our Scottish salmon farms continued to industries. produce very good results, and the development work in Sri Lanka on prawns The businesses in French speaking Africa has reached a viable level of output. were affected by the general reduction in demand. Our partnership companies in the Middle East performed well and held their profit levels despite the fall in government spending and the reduction in purchasing power.

Other operations

Paperboard and packaging In the United Kingdom substantial parts of the Thames group were sold during the

Agribusiness

--__. Our agribusiness interests consist of plantations companies, seed breeding I FL million 1985 1986 tissue culture, animal feeds and fish Turnover 3228 2042 farming.

Operating The unprecedented fall in palm oil pric profit 224 113 to the lowest level in real terms ever q -.. known caused a sharp decline in the profitability of our plantations business. Urgent measures were taken to cope with this situation, some of which will have long-term benefit. Production of palm oil commenced in Colombia; our new plantation there is producing higher yields than expected, in a country where internal demand still exceeds supply.

Tea prices were down on 1985 but our estates managed to achieve satisfactory results through improvements in productivity and technology, and astute marketing. The expansion of the estates in Kenya, using high-yielding clonal tea plants, is already well advanced and results so far have been very favourable.

Our animal feeds business in the Unite Kingdom benefited from improved q efficiencies and, with some.assistance from favourable weather, produced a most satisfactory result. ‘DIRECTORS’ REPORT REVIEW BY OPERATIONS

year; only the cartonboard mill at immunology and bacteriology has Workington now remains where further continued, and to widen our coverage of advances were made both in sales volume these markets the operations of Oxoid and margins. In Germany the 4P group of and Unipath have been merged. packaging companies produced further growth in sales and profit.

Fish and restaurants Nordsee introduced successful new concepts into its fish retail and restaurant operations in Germany. Our fast food business in Canada extended its range of outlets and had another successful year.

Medical products The new pregnancy testing kit Clearblue has been a success in the United Kingdom and has been extended to other European countries. Development work on new products in the areas of diagnostics,

The newly opened extraction plani for palm oil in Colombia. DIRECTORS’ REPORT OTHER SUBJECTS

In striving for greater understanding of the Research and development scientific factors which determine the behaviour of our products and govern the efficiency of production processes, our laboratories have identified a number of During 1986 the Group’s expenditure on scientific areas which have application research and development amounted to over many of our product groups. In FI. 985 million (1985: FL 1 013 million). This response to this feature we have substantial investment in science and established research teams in these technology is dedicated both to the generic areas, better staffed and equipped development of new businesses and to the than any one sector of our business alone continuing improvement and development could support, which attract scientists of of our existing products and manufacturing high calibre and which benefit from a wide processes. We believe this investment is range of contacts with the academic world. essential if we are to compete effectively and satisfy the requirements and expectations of the consumer. Harnessing this effort to our proven marketing skills will help create the growth upon which the continued success of the business depends.

Many of our products contain natural ingredients which can vary both in composition and availability. An increased understanding of these materials through basic and applied research has enabled us to overcome many of the inevitable production problems and to maintain the consistently high level of quality and safety of our products. Equally, we can respond effectively to changes in consumer preference, whether they concern the flavour and texture of foods, more convenient methods of cooking or the Personnel introduction of low calorie and low fat products. Examples of areas where such I 26 understanding makes a great impact include margarines, where melting At the end of the year the number of behaviour and flavour release can be people employed by the Unilever Group tailored; meat products, where textures around the world was 298 000, of whom can be fully adapted to the consumers’ over half were employed outside Europe. preference; and fish dishes which can be easily prepared in the microwave oven or There are at any one time within the grill. organisation many employees serving away from their own countries gaining the Our knowledge of the control of water day to day experience of running structure has allowed major progress in Unilever’s businesses which will equip products as different as liquid detergents them as candidates for senior positions in and low fat spreads, and our skill base in the Concern. biotechnology has enabled a natural route to be developed for the production of This is one aspect of the continuous savoury flavours. attention to career development and personnel planning which has long been a Much of our work is directed to the feature of our staffing policies. We development of sophisticated continue to identify the most able manufacturing techniques enabling us to managers as early as possible in their produce unique products with a resulting careers and to place them in positions of competitive advantage - one area where responsibility and challenge. We are aided this can be seen to considerable effect is in this by our basic management ice cream and prepared desserts, philosophy that operating decisions should although it is of relevance across the be decentralised and taken in the relevant range of our businesses. businesses around the world. DIRECTORS’ REPORT OTHER SUBJECTS

The table shows the numbers of employees in our parent and group companies and in our associated companies at the end of the year. It should be noted that the 1986 figures do not include 23 000 employees resulting from the acquisition of Chesebrough-Pond’s,

Parent and group Associated (000’S) companies companies Total 1985 1986 1985 1986 1985 1986

Europe 131 119 4 4 135 123

North America 22 23 - - 22 23

Rest of the World 151 156 45 38 196 194

304 298 49 42 353 340

Because of the need to remain competitive around the world. In particular we look to we continue to work hard on raising our female staff to play an increasing role productivity and our organisation remains in the progress of the business. responsive to changing market and economic conditions. To do this The aim of our personnel policy, therefore, successfully with the support of our is to ensure that all employees are able to employees, whilst at the same time realise their potential within the business honouring our commitments to them, and to enhance their contribution to the requires a procedure for open success of the Concern. communication and consultation. The form this takes depends on the local situation and the particular requirements of respective jurisdictions. The practice of consultation however is to be found throughout the Concern as an integral part of our management philosophy. We are actively encouraging the development of Thanks to employees consultation procedures in our countries so as to involve all levels of employees in measures to improve efficiency. The success achieved by the Concern As a further stimulus to efficiency and during 1986 is principally due to the performance a growing proportion of the dedication, skill and effort of our remuneration of our senior managers is employees throughout the world. The being linked to results and the Directors wish to record their sincerest achievement of agreed objectives. Where appreciation of the way in which all Directors’ remuneration contains such employees have responded to the payments, then this arrangement, in challenges and opportunities of the past common with other aspects of their year. remuneration, is monitored by a committee of Advisory Directors. We believe that this closer identification with business performance will improve our competitive Capital expenditure ability, to the advantage of employees and shareholders alike.

The Concern’s management policies Capital expenditure in 1986 amounted to require that any employee’s career will be FI. 2 245 million (1985: FI. 2 653 million). The determined solely by personal merit. No tables on page 35 give an analysis by employee will suffer because of his or her geographical areas and by operations sex, race, ethnic origin or religious beliefs. both for 1986 and for earlier years. These principles guide our operations DIRECTORS’ REPORT OTHER SUBJECTS

A reactor at Lever Brothers’ new Hammond Indiana plant, opened in May 1986 for the specialised production of and Caress beauty bars.

Purchase of a factory for the production of Capital projects toilet soap and toothpaste in Korea. Relocation of a margarine factory in Turkey. Capital projects totalling FI. 2 799 million were approved by the Board in 1986 (1985: Development of oil plantations in Thailand. FI. 2 352 million). These projects include:

Installation of manufacturing facilities for low fat products in the United Kingdom.

Modernisation of manufacturing facilities for bread improver products in Germany.

Modernisation of a processed meats factory in Germany. Outlook for 1987 Relocation of the personal products manufacturing facilities in France. We do not foresee any developments in Replacement of a silicate plant in the the economies that are important to us Netherlands. which are likely to have a material effect on the business. Although the prices of our Construction of an adhesives plant and principal raw materials could well recover headquarters for starch from the low levels experienced during products in Germany. 1986, we think that any increase will be gradual and unlikely to have a significant Modernisation of a soap-making plant in impact on results or cash flow. the United Kingdom. We plan to continue to invest substantial Modernisation and replacement of two sums in our factories and in support of our animal feeds mills in the United Kingdom. brands. The level of capital expenditure is expected to grow in 1987 as it has in past Several important projects to increase years, and will be financed out of funds manufacturing capacity for liquid and generated by the business. powder detergents in the United States. It continues to be necessary to produce Construction of a new powder detergents and distribute our products as efficiently plant in Thailand. as possible in order to maintain and strengthen our market position. This will Mr FitzGerald joined Unilever in the mean that employee numbers may be Republic of Ireland in 1967. He served in reduced in a number of instances. An the London Head Office from 1972 to 1980 increase in personnel establishment can and after a period overseas returned to therefore only be expected in those London to become Treasurer of Unilever in operating units where turnover increases 1985. He assumed the responsibilities of rapidly. Financial Director in November 1986.

We remain confident that the Company will Mr Peelen joined Unilever in 1966 and continue to make good progress. served mainly in our meat business in the Netherlands until 1979 when he became Chairman of Van den Bergh en Jurgens B.V. He was appointed Vice-Chairman of lndustrias Gessy Lever, Brazil in 1983 and Chairman of that company in 1984.

Directors

As already announced, Mr K. H. Veldhuis, having reached the age of 62, will not be offering himself for re-election at the Annual General Meetings.

Mr Veldhuis joined Unilever in the Advisory Directors Netherlands in 1950. After working in Germany, Sweden and Indonesia, where he was Chairman of our business, he joined the London Head Office in 1967 and In 1986 Sir Robert Haslam and Dr Alfred was elected to the Boards of Unilever in Herrhausen were appointed Advisory 1968, assuming responsibility for Directors of N.V. and PLC. Engineering and, later, Research Division. He took up his present post as Regional Sir Robert is Chairman of British Coal, a Director for Continental Europe in 1982. In Director of the Bank of England and a 1984 Queen Beatrix appointed him a Knight former Chairman of the British Steel of the Order of the Netherlands Lion. His Corporation. Dr Herrhausen is a member colleagues record their sincere of the Managing Board of Deutsche Bank appreciation of his distinguished AG and Chairman of the Supervisory contribution to the business. Board of Daimler-Benz AG.

The Directors also wish to express their appreciation of the services of Mr A. W. P. Stenham, Financial Director for sixteen years, who resigned from the Boards of both Companies in November 1986 to take up a senior external Secretaries appointment

All the remaining Directors named on page 4 will, in accordance with the Articles of Mr M D. Snoxall retired at the end of 1986 Association of N.V. and PLC, retire from after nearly 33 years service. He had been office at the forthcoming Annual General a Secretary of N.V. and PLC since 1984 Meetings and will offer themselves for The Directors record their warm re-election. In addition, appreciation of his valued counsel and Mr N. W. A. FitzGerald and Mr J. Peelen service. He was succeeded by have been nominated for election as Mr S. G. Williams. Directors of both Companies. ~~~~~~ DIRECTORS’ REPORT OTHER SUBJECTS

Dividends Auditors

The Boards have resolved to recommend As already announced, it is the intention to to the Annual General Meetings on recommend the appointment of sole 20th May, 1987 the declaration of final auditors at the Annual General Meetings. dividends on the ordinary capitals in respect of 1986 at the rates shown in the Resolutions will be proposed for the table below, which are equivalent in value reappointment of Coopers 8 Lybrand in terms of the Equalisation Agreement: Nederland as auditors of N.V. and Coopers & Lybrand as auditors of PLC. 1985 1986 Their present appointments together with N.V. those of Price Waterhouse Nederland as per FI. 20 auditors of N.V. and Price Waterhouse as ordinary capital auditors of PLC will end at the conclusion of the Annual General Meetings. Interim FI. 4.66 FI. 4.66 Final FI. 10.16 FI. 10.67 The Directors wish to record their sincere appreciation of the excellent service given Total FI. 14.82 FI. 15.33 to Unilever by Price Waterhouse over the years.

PLC per 25p ordinary share

Interim 11.57p 14.99p Final 27.05~ 36.17~ Total 38.62~ 51.16~ Other information The N.V. final dividend will be payable as from 3rd June, 1987 (or in the case of the New York shares on 16th June, 1987). A review has recently been completed of The PLC final dividend will be paid on Unilever’s methods and rates of 3rd June, 1987 (or in the case of holders depreciating tangible fixed assets. As a of American Depositary Receipts on result of the review changes will be 1 Ith June, 1987) to shareholders implemented in our accounting for these registered on 1st May, 1987. assets with effect from 1st January, 1987. The changes will increase the balance For the purpose of equalising dividends sheet value of tangible fixed assets at under the Equalisation Agreement, 1st January, 1987 by approximately Advance Corporation Tax (ACT) in respect FI. 900 million and will increase operating of any dividend paid by PLC has to be profit in 1987 by some FI. 135 million. Fuller treated as part of the dividend. PLC’s 1986 details of the changes appear on page 12 final dividend has been calculated by of the annual accounts booklet. reference to the rate of ACT announced by the United Kingdom Chancellor of the Exchequer in his Budget Statement on 17th March, 1987; if the effective rate applicable to payment of the dividend is By Order of the Board different the amount will be adjusted accordingly and a further announcement D. C. Buijs made to the shareholders of PLC. S. G. Williams Secretaries of Unilever N.V.

31st March. 1987 The following figures are largely extracted from the full combined consolidated Unilever N.V. and Unilever PLC Annual Accounts for 1986 and earlier years, which have been prepared under the historical cost convention. They are in accordance with accounting principles generally accepted in the Netherlands and the United Kingdom, except that the treatment of deferred taxation, for which full provision is made, complies with Dutch legislation as currently applied rather than with generally accepted accounting principles in the United Kingdom.

The figures on the following pages are expressed in Dutch guilders, except where stated otherwise. Fluctuations in exchange rates over time affect the combination of the financial statements of N.V. and PLC into a single currency, with the result that trends reflected in the guilder combined statements can differ significantly from the trends shown in the pounds sterling and US dollar combined statements contained in other versions of this booklet.

Statement from the auditors We have issued an unqualified report dated 31st March, 1987 on the full accounts of Unilever N.V. and Unilever PLC and their combined accounts for the year 1986, which are included in the Annual Accounts 1986 of Unilever N.V. and Unilever PLC.

Auditors of Unilever N.V.: Auditors of Unilever PLC:

31 Price Waterhouse Nederland Coopers & Lybrand The Hague London

Coopers & Lybrand Nederland Rotterdam

31st March, 1987 EXTRACTS FROM THE COMBINED CONSOLIDATED PROFIT AND LOSS ACCOUNTS OF UNILEVER N.V. AND UNILEVER PLC

FI million 1981 1982 1983 1984 1985 1986

Turnover a) 56 115 55 903 59 434 66 791 66 771 55 363 costs (52 790) (52 904) (56 111) (62 950) (62 974) (51 731)

Operating profit 3 325 2 999 3 323 3841 3 797 3 632

Income from fixed investments “) 313 295 264 292 302 166 Other interest receivable and similar income 435 477 494 459 494 579 Interest payable and similar charges (726) (703) (665) (769) (779) (683)

Financial items 22 69 93 (18) 17 62

Profit on ordinary activities before taxation 3 347 3 068 3416 3 823 3 814 3 694 Taxation (1 381)c) (I 351) (I 566) (1 605) (I 591) (I 429)

Profit on ordinary activities after taxation 1 966 1717 1 850 2218 2 223 2 265 Outside interests in group companies (102) (122) (137) (1401 (159) (121)

Profit on ordinary activities attributable to shareholders 1 864 1 595 1713 2 078 2 064 2144 Extraordinary items, less taxation and outside interests - - - (108)d) -

Profit after extraordinary items attributable to shareholders 1 864 1 595 1713 1 970 2 064 2144 Preference dividends (16) (16) (16) (If-3 (16) (16) Dividends on ordinary capital (5861 (578) (634) (684) (718) (751)

Profit of the year retained 1 262 1 001 1 063 1 270 1 330 1377

Movements in profit retained Profit of the year retained 1 262 1001 063 1 270 1 330 1 377 Goodwill 66 (165) (51) (973) (152) (572) Effect of exchange rate changes c) 287 128 315 (1 526) (799) Sterling/guilder realignment “) (419) (6::) 322 (514) (209) (I 234)

32 Net movements during year 1 196 172 1 462 98 (557) (I 228) Profit retained - 1st January 9 980 11 176 1 348 12 810 12 908 12 351

Profit retained - 31st December 11 176 11 348 12 810 12 908 12 351 11 123

a) Turnover comprises sales of goods and services after deduction of e) Exchange differences arislng In the accounts of individual companies discounts and sales taxes It includes sales to related companies but does from transactlons denominated In foreign currencies are dealt with In the not Include sales by related companies or sales between group companies Individual companies’ proflt and loss accounts

b) Includes share of associated companies’ proflt before taxation In preparrng the consolidated accounts of N.V. in gullders and of PLC In 1981 1982 1983 1984 1985 1986 sterling, proflt and loss accounts for the year and assets and IiabMes at UAC International 177 159 162 185 137 36 the year end are translated at year-end rates of exchange The effect of Other operahons 84 73 56 72 93 81 exchange rate changes during the year on the assets and IiabWes at the beginning of the year IS recorded as a movement In proflt retalned 261 232 218 257 230 117 In arriving at the combined figures in guilders or sterling, the figures for N V in guilders or PLC In sterling are translated at the year-end sterling/guilder exchange rate, except for the ordinary capital of N V or PLC, which is “) Includes FI. 105 million stock relief benefit, mainly applicable to 1980, translated at the Equallsatlon Agreement rate of r 1 = FI 12 The effect of arising from changes contained in the United Kingdom Finance Act 1981. restahng the assets and liablllties of N.V and PLC at the begInnIng of the year at the year-end sterling/gullder exchange rate IS described as d) Includes an extraordinary charge, net of tax relief, of FI. 356 million for sterllng/gullder realignment and IS shown as a movement In proflt retamed losses arising, and provisions for estimated losses less surpluses, consequent on the decision to withdraw from certain activities, and a deferred taxation credit of FI. 248 million following the reductions in rates of corporation tax legislated in the United Kingdom Finance Act 1984. EXTRACTS FROM THE COMBINED CONSOLIDATED BALANCE SH OF UNILEVER N.V. AND UNILEVER PLC

as at 31st December

FI. million 1981 1982 1983 1984 1985 1986

Fixed assets Tangible assets 9 752 10 108 11 110 12 915 12 162 11316 Investment in Chesebrough-Pond’s Inc. “) - - - - - 6 438 Fixed investments 1 472 1 562 1 454 1 626 1 246 795

Current assets Stocks 8 863 8 390 9 267 11501 9 744 8210 Debtors 7 579 7 442 8 336 9 359 8 259 7 327 Current investments 895 865 1744 1 856 3 492 6 467 Cash at bank and in hand 2 376 2 349 2 400 2 752 2 398 3 997

19 713 19046 21 747 25 468 23 893 26 001 Less: Creditors due within one year Borrowings 2 077 1 952 2 032 4 285 3919 7 146 Trade and other creditors 7 593 7 146 8 362 10 155 9 404 8 507 Unpaid acceptances from previous shareholders of Chesebrough-Pond’s Inc. - - - - - 6438 Taxation on profits 911 931 949 1 048 1 020 945 Dividends 372 372 432 480 502 531

Net current assets 8 760 8 645 9 972 9 500 9 048 2 434

Total assets less current liabilities 19 984 20 315 22 536 24 041 22 456 20 983

Creditors due after more than one year Borrowings 2 992 2844 2 739 3 274 2 587 2 678 Other creditors 165 204 429 436 419 519

Provisions for liabilities and charges Pensions and similar obligations 1 841 2 066 2 526 2 930 2 978 3 166 Deferred taxation and other provisions 1 893 1951 2213 2551 2 258 1 800

Outside interests in group companies 678 692 597 738 684 563

Capital and reserves Called up share capital 1 478 1 476 1 477 1 400 1 399 1396 Share premium account 94 90 91 89 87 81 Profit retained and other reserves 10 843 10 992 12464 12 623 12044 10 780

12415 12 558 14 032 14 112 13 530 12 257

Total capital employed 19 984 20 315 22 536 24 041 22 456 20 983

8) Unilever’s offer for Chesebrough-Pond’s Inc. was declared Accordmgly, the Unilever Investment in Chesebrough-Pond’s Inc IS unconditional on 30th December, 1986 and legal ownership of 95.4% of the included In the group accounts at cost. It IS expected that, following the company’s stock vested on that date, the company thus becoming a revaluatron and restatement of the assets and lrabrlrtres of the Unilever subsidiary. Chesebrough-Pond’s group In 1987, a substantial part of the purchase consideration will relate to IntangIble assets and goodwrll Significant parts of the Chesebrough-Pond’s group are intended for early disposal and steps are actively being taken to sell them. Completion of the A summary of the audited consolidated balance sheet of complex process of attributing fair values to the worldwide assets and Chesebrough-Pond’s Inc and Its subsrdtaries at 31st December, 1986, liabilities of the remaining businesses, and of restating them in accordance prepared In US dollars under United States’ generally accepted accountmg with Unilever’s accounting policies, would have given rise to a delay in the principles and translated into guilders at the year-end rate of exchange, preparation of Unilever’s group accounts disproportionate to the value of appears In note (9) on page 14 of the annual accounts booklet the information to shareholders. In view of the temporary nature of Unilever’s control over significant parts of the Chesebrough-Pond’s group, and the imprecision with which the remaining parts could be valued in the time available, it is considered that the true and fair view in the Unilever 1986 Annual Accounts is better served by not consolidating Chesebrough-Pond’s Inc. and its subsidiaries. EXTRACTS FROM THE COMBINED CONSOLIDATED SOURCE AND USE OF FUNDS OF UNILEVER N.V. AND UNILEVER PLC

Ft. million 1981 1982 1983 1984 1985 1986

Funds generated from operations Profit on ordinary activities before taxation 3347 3068 3416 3823 3814 3 694 Elimination of items not involving a flow of funds: Depreciation 1 098 1 153 1319 1 395 1385 1 282 Others 115 179 267 150 142 260

4560 4400 5002 5368 5341 5236 Increase/decrease in borrowings due after more than one year 292 (84) (135) 107 (473) 330

Total sources 4852 4316 4867 5475 4868 5566

Taxation payments during the year (924) (1 091) (1 325) (1 198) (1406) (1 317) Dividends paid during the year (564) (580) (591) (641) (690) (704) Capital expenditure less disposals (1 911) (1 821) (1 960) (2 101) (2 363) (1 932) Purchase/sale of group companies (370) (46) (2340) 402 (605) Purchase/sale of fixed investments i::, 1 280 (7) 57 25 Increase/decrease in stocks, debtors, trade and other creditors (794) (263) (95) (659) 388 Other uses 185 (21) (152 (141) (257) (%

Total uses (3974) (4 145) (3889) (7 087) (3 869) (4388)

Net increase/decrease in net liquid funds a) 878 171 978 (1612) 999 1 178

Net liquid funds - 31st December 1 189 1262 2112 323 1971 3 318

of which: Current investments 897 865 1744 1856 3492 Cash at bank and in hand 2374 2349 2400 2752 2398 Borrowings due within one year (2082) (1 952) (2 032) (42851 (3 919)

a) Excludes effect of exchange rate changes on opening balances ADDITIONAL GEOGRAPHIC AND SEGMENTAL INFORMATION

FL million 1981 1982 1983 1984 1985 1986

Turnover Europe 37943 36503 37938 40544 42381 33823 North America 7020 7565 9550 12838 11553 9126 Rest of the World 11 152 11 835 11 946 13 409 12837 11 814

56115 55903 59434 66791 66771 55363

Food products 25770 25800 28485 33507 33930 21536 Detergents and personal products 13210 13763 15407 17371 16242 15 566 Speciality chemicals 3418 3596 4068 4998 4785 4192 Other operations 13717 12744 11474 IO 915 11814 8069

56115 55903 59434 66791 66771 55363

Operating profit Europe 1783 1363 1473 1707 2083 2047 North America 360 428 622 784 432 369 Rest of the World 1182 1 208 1228 1350 1282 1216

3325 2999 3323 3841 3797 3632

Food products 1545 1445 1622 2001 1 958 1973 Detergents and personal products 1030 984 1070 1030 699 815 Speciality chemicals 272 309 433 533 508 441 Other operations 478 261 198 277 632 403

3325 2999 3323 3841 3797 3632

Profit on ordinary activities attributable to shareholders Europe 1080 825 877 1 103 1 359 1 522 North America 155 194 298 349 159 97 Rest of the World 629 576 538 626 546 525

1864 1 595 1713 2078 2064 2144

Capital employed Europe 13531 13 152 14243 13811 13 884 14 167 North America 2897 3056 3692 4607 3 942 3 117 Rest of the World 3556 4107 4601 5623 4630 3699

19 984 20315 22536 24041 22456 20983

Capital expenditure Europe 1338 1233 1270 1333 1515 1387 North America 208 254 443 675 704 452 Rest of the World 555 546 467 458 434 406

2101 2 033 2 180 2466 2 653 2245

Food products 882 843 843 1028 1056 999 Detergents and personal products 468 522 574 698 616 583 Speciality chemicals 146 132 204 244 457 277 Other operations 605 536 559 496 524 386

2101 2033 2180 2466 2653 2245 1st 2nd 3rd 4th Total quarter quarter quarter quarter year

Turnover 1986 FL million 13 196 14 153 13 526 14488 55 363 o/o 24 26 24 26 100

1985 FL million 17 314 16 663 16 301 16493 66 771 01” 26 25 24 25 100

Operating profit 1986 FL million 745 1 024 997 866 3 632 % 21 28 27 24 100

1985 FL million 817 959 960 1 061 3 797 o/o 22 2.5 25 28 100

Profit before taxation 1986 FL million 762 1 003 1 031 898 3 694 o/o 21 27 28 24 100

1985 Ft. million 782 948 979 1 105 3 814 o/o 20 25 26 29 100

Profit on ordinary activities attributable to shareholders 1986 FI. million 420 540 585 599 2 144 o/o 20 25 27 28 100

1985 FI. million 383 492 527 662 2 064 o/o 18 24 26 32 100

Earnings per share 1986 Guilders per FL 20 of capital 1.41 9.63 10.43 10.69 38.22 Pence per 25p of capital 34.76 44.12 48.50 49.57 177.55

1985 Guilders per FI. 20 of capital 6.81 8.77 9.39 11.82 36.79 Pence per 25p of capital 25.60 32.87 35.30 44.19 137.96

The figures differ from those originally published due to results for both years having been recalculated at the year-end rates of exchange used fol the respective years. I ADDITIONAL FINANCIAL DATA

1981 1982 1983 1984 1985 1986

Earnings per share a) Guilders per FL 20 of capital 33 16 28.34 30.46 37.01 36.79 38.22 Pence per 25p of capital 105.39 100.41 102.84 134.33 137.96 177.55

Ordinary dividends N.V. - Guilders per FI. 20 of capital 12.04 12.04 13.02 14.11 14.82 15.33 PLC - Pence per 25p of capital 26.87 28.83 30.86 35.52 38.62 51.16

Capital expenditure (FI. million) 2 101 2 033 2 180 2 466 2 653 2 245 Depreciation (FL million) 1 098 1 153 1319 1 395 1 385 1 282

Employees (group companies) Staff costs (FL million) IO 814 IO 697 11491 II 701 11 418 10 006 Number (in thousands) at 31st December 292 283 267 254”) 304 298 “)

Ratios d) Operating margin (O/o) 5.9 5.4 5.6 5.8 5.7 6.6 Return on capital employed (O/o) 10.7 9.3 6.8 9.9 10.5 11.3 Return on shareholders’ equity (O/o) 15.2 12.9 12.3 14.9 15.5 17.8

Gearing (O/o) 27.9 26.2 24.6 33.7 31.4 43.4

Share prices N.V. per FI. 20 ordinary share In Amsterdam (guilders) High 164 211 254 317 405 528 LOW 123 143 188 231 313 344

PLC per 25p ordinary share In London (pence) High 652 805 895 1 100 1 375 2 208 Low 438 555 695 835 1 000 1 325

a) The calculation of earnings per share is based on the combined profit of b) Excludes 65 000 employees of the Group, for whom no the year on ordinary activities attributable to ordinary capital divided by the staff costs were included in 1984 as a consequence of the decision to take combined number of share units representing the combined issued ordinary up rn Unilever’s 1985 results the profrts of the Brooke Bond Group for the capital of N.V. and PLC. For the calculation of combined ordinary capital the fourth quarter 1984. rate of exchange E 1 = FI. 12 has been used, in accordance with the Equalisation Agreement. This Agreement requires as a general rule the r) Excludes 23 000 employees of the Chesebrough-Pond’s group, dividends and other rights and benefits attaching to each FI. 12 nominal of acqurred on 30th December, 1986, for whom no staff costs are Included in ordinary capital of N.V. to be equal in value at the relevant sterling/guilder 1986 rate of exchange to those attaching to each f 1 nominal of ordinary share capital of PLC as if each such unit formed part of the ordinary capital of one “) Operatrng margin is operating profrt expressed as a percentage of and the same company. turnover Return on caprtal employed IS the sum of profrt after tax and Interest (after tax) on borrowtngs due after more than one year, expressed as a percentage of caprtal employed. Return on shareholders’ equity IS profit on or&nary actrvrtres attributable to ordrnary shareholders expressed as a percentage of caprtal and reserves attributable to ordmary shareholders Gearrng is borrowmgs expressed as a percentage of the sum of borrowrngs, caprtal and reserves and outside interests rn group companies II SALIENT FIGURES IN VARIOUS CURRENCIES

1986above 1985 Dutch Sterling Belgran German French Austrian US Swiss Guilders Pounds Francs Marks Francs Schtllings Dollars Francs

Rates of exchange “1 3.23 0.0543 1.1296 0.3409 0.1604 2.1800 1.3511 (one unit of currency = FI.) 4.00 0 0551 1 1264 0.3670 0.1603 2.7600 1 3365

In millions of currency

Turnover 55 363 17 140 1019499 49 021 162 318 345 204 25 368 40 965 66 771 16693 1211902 59 260 181 952 416 487 24 205 49 912

Operating profit 3 632 1 124 66 873 3 215 10 647 22 643 1 664 2 687 3 797 949 68 912 3 370 10 346 23 683 1 376 2 838

Profit on ordinary activities 3 694 1 143 68 015 3 270 10 829 23 030 1 692 2 733 before taxation 3 814 953 69 219 3 385 10 392 23 788 1 382 2851

Profit on ordinary activities 2 265 701 41 695 2 005 6 638 14118 1 037 1 675 after taxation 2 223 556 40 340 1 973 6 056 13 863 805 1661

Profit on ordinary activities 2 144 664 39 483 1 898 6 286 13 369 982 1 586 attributable to shareholders 2 064 516 37 467 1 832 5 625 12 876 748 1 543

Ordinary dividends 751 232 13 831 665 2 202 4 683 344 556 718 179 13 042 638 1 958 4 482 260 537

Profit of the year retained 1 377 427 25 365 1 220 4 038 8 589 631 1 019 1 330 333 24 139 1 180 3 624 8 296 482 994

In units of currency Earnings per share Per FI. 20 of capital 38.22 1 163.67~ 76391 33.84 112.12 238.29 17.51 28.29 36.79 919.71p 667.67 32.66 100.24 229.50 13.33 27.53

Per 25p of capital 5.73 177.55p 105.59 5.08 16.82 35.74 2.63 4.24 5.52 137.961, 100.15 4.90 15.04 34.42 2.00 4.13

Ordinary dividends h, N.V - per FL 20 of capttal 16.33 474.61 p 262.32 13.57 44.97 95.57 7.03 11.35 14.82 370.5op 268.97 13 16 40 38 92 45 5 37 11.09

PLC - per 25p of capttal 1.66 5l.‘l6p 30.43 1.46 4.84 10.30 9.76 1.22 1.54 38.62~ 28.04 1.37 4.21 9.64 0 56 1.15

a) Rates of exchange are the respective year-end rates used in b) The value of drvrdends recetved by shareholders in currencres other translating the combined figures in the various currencies. than guilders or sterlrng WIII be affected by fluctuatrons rn the rates of exchange after the year end.

Movements between 1985 and 1986 wrll vary accordrng to the currencies In whrch the figures are expressed CAPITAL > ) LISTING DATES FOR DIVIDEND AND INTEREST PAYMENTS

N.V. Ordinary dividends The shares or certificates (depositary receipts) of Unilever N.V. and PLC N.V. are listed on the stock exchanges in Amsterdam, London, New York, and in Austria, Belgium, France, Interim Announced Germany, Luxembourg and Switzerland. November, Paid December The geographical spread of N.V.‘s ordinary shareholdings (which are largely in bearer form) based on the country of Final Proposed March, payment of the final dividend paid in 1985 and 1986 was: Paid May/June

1985 1986 Preferential dividends N.V. 010 O/O 4% Preference Paid 1st January The Netherlands 55 58 6% Preference Paid 1st October United States 20 16 7% Preference Paid 1st October Switzerland 15 15 United Kingdom 4 4 PLC Germany 2 2 5% Preference Belgium 2 2 7% Preference Paid 2nd January France 1 1 8% Preference and 1st July Other countries 1 2 20% Preferred Ordinary i 100 100 Loan stock interest N.V. PLC 6% 1972/91 Paid 15th January The shares of Unilever PLC are listed on The International 4’/z% 1984/9 1 Paid 7th June Stock Exchange of the United Kingdom and the Republic 63/40/o 199 1 Paid 26th August of Ireland Limited and, as American Depositary Receipts, in 7 ‘/20/o 1993 Paid 12th November New York. PLC In 1986, as in 1985, the holders of over 99% of PLC’s Unsecured loan stocks Paid 30th June ordinary shares had registered addresses in the United and 31st December Kingdom. Interim announcements of results

First quarter results Mid-May 39 First half-year results Mid-August

Nine months results Mid-November

Provisional results for the year Early March This booklet, in which the currency figures are expressed in guilders, is also available in the original Dutch version. In addition there is an English version issued by Unilever PLC with currency figures in pounds sterling and containing the Unilever PLC Directors’ Report, as well as an English version with currency figures translated into US dollars. All these versions are identical with this booklet except for the difference in currencies and except that the PLC version contains some additional details which are not required by Dutch legislation.

The complete Unilever N.V. annual accounts for 1986, together with the auditors’ report thereon and some additional information, are contained in a separate booklet entitled ‘Unilever in 1986, Annual Accounts’, which is an English translation of the original Dutch publication and in which the currency figures are likewise expressed in guilders. In addition an English version of that booklet, issued by Unilever PLC, is available with currency figures expressed in pounds sterling and containing the complete Unilever PLC annual accounts for 1986.

Both N.V. and PLC make filings with the United States Securities and Exchange Commission (SEC) in the form required by United States legislation.

Copies of all versions of the above-mentioned booklets, of the Chesebrough-Pond’s Consolidated Financial Statements for 1986, and of the filings made with the SEC, as well as of the quarterly results publications are available free of charge from Unilever N.V., External Affairs Department, P.O. Box 760,300O DK Rotterdam, the Netherlands, or from Unilever PLC, External Affairs Department, P.O. Box 68, London EC4P 4BQ, United Kingdom.

Printed by 4P Drukkeri] Reclame B L’, Moienbaan 2, 2908 LM Cape//e aan den IJssel, the Netherlands